Bitcoin has blown past $11,000, setting records, but confounding analysts


It was only two weeks ago that the Bitcoin faithful were perturbed by the ranging behavior of their favorite cryptocurrency. BTC had been mired within a tightly bounded range between $7,500 and $8,100, with no particular since of what was to come. Even advocates began seeing “Head-and-Shoulder” formations that spoke that doom was imminent, perhaps the 30%+ correction that everyone was expecting. Today, after a mad rush of 40% gains and climbing to a plateau of $11,654, fear, uncertainty, and doubt (“FUD”) have now been replaced with, wait for it, “FUD” once more.

Bitcoin’s meteoric rise just keeps plodding along, confounding analysts that have spent lengthy careers inspecting every angle, pattern, and ratio of market pricing behavior. Their collective “gut” is tightening up, once again, as the inevitability of a correction grows exponentially. Despite claims that volumes are not sufficient to propel Bitcoin any further or that a monstrous level of profit-taking orders will beat BTC into submission, our courageous token seems oblivious to the talk and walks its own walk. When the so-called experts are confounded like the rest of us, which forecasts are creditable?

The “Summer Month Hypothesis”, which notes that July and August are historically bad months that have negative returns, is still being bandied about in the analyst community. For now, however, all crypto eyes will be focused on the G20 confab that is due to convene in Japan at the end of this week. Finance ministers are expected to adopt inordinately strict new rules to force crypto exchanges to get in line and provide adequate KYC/AML/CFT compliance controls that will dispose of crypto anonymity. An emergency session of crypto exchange executives with G20 folks has been arranged.

Regulatory skirmishes have typically had a deleterious impact on Bitcoin prices. It remains to be seen if this current rally will succumb or even notice the goings on in Japan. Lately, weekend trading habits have been to accelerate the march forward. This weekend will test this pattern of late. Elliott Wave enthusiasts have also been very vocal in recent days that a “correction is coming”. They stake their careers on this prediction, since everything they believe in, i.e., five-stage impulse waves, followed by three-stage corrective waves, is ablaze on their computer screens, screaming at them.

An estimated majority of traders have always condemned Elliott’s masterpiece as being far to subjective, but its devotees base their judgments on mountains of evidence that are clearly visible to their own eyes, even if only barely discernible to other mere mortals. If you do buy into the theory, it did forecast a bottom in December and that a major rally would take place in 2019, but its wave targets were blown out weeks ago. By their reckoning, the impulse wave has ended. A corrective wave must follow and take Bitcoin down to the depths, perhaps below $8,000 or more.

Having said all of this, one glaring headline today read: “Bitcoin on Track for Best Second Quarter Price Gain on Record”. Yes, a 40% gain in two weeks just occurred, but Bitcoin is on track to record a 165% gain for the second quarter. In the quarterly BTC chart depicted below, it can be seen that there are only three other quarters that have been better, one first and two fourth quarter prints, but for second quarters, Bitcoin is about to turn the “Sell-in-May-and-Go away” axiom on its head.

Outside of Wave Theory aficionados, the majority of other analysts sense that Bitcoin has formed a strong underpinning for its next move. Although it appears mired in strong resistance from $11,250 to $11,400, Bitcoin soothsayers are confident that it will continue upward, and it has done just that at the moment as I check the charts, rising above $11,900 and tempting fate at $12,000. It also happens that market leaders are converging on San Francisco for the two-day Bitcoin 2019 Conference.

ThinkMarkets UK chief market analyst Naeem Aslam noted:

Investors didn’t lose their interest when the first bubble busted, they simply moved on the side-line waiting for the next bull run to start. This confirms that the surge in the Bitcoin price is mainly due to the institutional participation. I do think the next rally is going to be a lot more stronger than the previous one, one can call it a bubble, but this time the range could very well be between $60,000 to $100,000.

Yes, a rare few are staking claims to the upper atmosphere, but let’s not get too carried away with talk of the future.

Obviously, emotional exuberance does pervade the industry after Bitcoin’s recent stellar resurgence, but sooner or later, gravity will make an appearance. What goes up, does eventually come down. For the time being, let caution be your guide.

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